Stocks Surging into Afternoon on Dovish Yellen Commentary, Dollar Weakness, Earnings Optimism, Commodity/Technology Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• Volatility(VIX) 17.3 -6.0%
• Bloomberg Global Risk On/Risk Off Index 3,237.0 +49.0 points

• Euro/Yen Carry Return Index 136.51 +.39%

• Emerging Markets Currency Volatility(VXY) 9.3 -1.0%

• S&P 500 Implied Correlation 52.0 +1.5%

• ISE Sentiment Index 122.0 +28.0 points
  

• Total Put/Call .81 -6.9%

• NYSE Arms .83 +10.7%

Credit Investor Angst:

• North American Investment Grade CDS Index 50.5 -1.5%
  

• US Energy High-Yield OAS 429.44 -.35%

• European Financial Sector CDS Index 59.74 -.4%

• Italian/German 10Y Yld Spread 118.0 +3.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 79.65 -.04%
  

• Emerging Market CDS Index 157.37 -4.7%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.40 -.06%

• 2-Year Swap Spread 10.25 -.5 basis point

• TED Spread 15.25 -1.5 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -2.5 -1.0 basis point
  
• MBS  5/10 Treasury Spread  63.0 -.25 basis point
  
• IHS Markit CMBX BBB- 6 71.75 +.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.48 +.65%
• 3-Month T-Bill Yield .01% unch.
  

• Yield Curve 141.0 -2.0 basis points
  

• China Iron Ore Spot 203.50 USD/Metric Tonne +6.1%

• Citi US Economic Surprise Index 19.2 -3.1 points

• Citi Eurozone Economic Surprise Index 162.3 -2.0 points
  

• Citi Emerging Markets Economic Surprise Index 62.7 +11.0 points

• 10-Year TIPS Spread 2.50 +4.0 basis points
• 93.0% chance of no change at Sept. 22nd meeting, 93.0% chance of no change at Nov. 3rd meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating +28 open in Japan 
• China A50 Futures: Indicating +12 open in China

• DAX Futures: Indicating -5 open in Germany

Portfolio:

• Higher: On gains in my tech/biotech/medical/industrial/commodity sector longs
  

• Disclosed Trades:  Covered some of my (IWM)/(QQQ) hedges and some of my emerging market shorts
  

• Market Exposure: Moved to 100% Net Long
  

Bear Radar

 Style Underperformer:

• Large-Cap Value +.7%

Sector Underperformers:

• 1) Computer Services -.5% 2) Foods -.2% 3) Paper -.1%

Stocks Falling on Unusual Volume: 

• CVNA, DKNG, BYND, LQDT, MNST, PODD, MRTX, AL, IBP, TVTX, APPN, SHAK, TDC, FROG and CCXI
  

Stocks With Unusual Put Option Activity:

• 1) CCXI 2) AVYA 3) STMP 4) UUP 5) GPRO
  

Stocks With Most Negative News Mentions:

• 1) CCXI 2) VRM 3) HOME 4) TRIP 5) HSY
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.4%

Sector Outperformers:

• 1) Education +5.0% 2) Shipping +3.1% 3) Oil Service +3.0%

Stocks Rising on Unusual Volume:

• MD, FNKO, YMAB, QRTEA, BILL, ADTN, NKLA, QDEL, IHRT, OPRX, RVLV, ROKU, EQT, SVMK, TEN, CARG, MTW, INVE, RDFN, ET, DDOG, NKTR, FOXF, GPRO, AVID, EOG, IRTC, WW, EXPE, COMM, TIL, TUP, BV, CNC, CVGI, MCK, NET, AXGN, UPLD, FOUR, SCU, BGFV, MSI, CALX, RGNX, PLBY, WK, SBH, ETSY, AVYA, GNK, ALLO, CEIX, HEI/A, NKE, CENX and AHCO
  

Stocks With Unusual Call Option Activity:

• 1) CCXI 2) DBA 3) WW 4) ET 5) DBI

Stocks With Most Positive News Mentions:

• 1) ROKU 2) MD 3) ET 4) DSX 5) DDOG
  

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Morning Market Internals

NYSE Composite Index:

• Volume Running -17.4% Below 100-Day Average 
• 10 Sectors Rising, 1 Sector Declining
• 69.5% of Issues Advancing, 27.2% Declining
• 372 New 52-Week Highs, 14 New Lows
• 87.6% of Issues Above 200-day Moving Average
• Average 14-Day RSI 55.1%
  
• Bloomberg Global Risk-On/Risk-Off Index 3,227.0 +40.0 points
• Vix 17.5 -4.9%
• Total Put/Call .81 -6.9%
• TRIN/Arms .87 +16.0%

Friday Watch

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 79.5 -.5 basis point.

• China Sovereign CDS 36.75 -.75 basis point.

• Bloomberg Emerging Markets Currency Index 61.08 +.01%.
• Bloomberg Global Risk-On/Risk Off Index 3,134.0 -55.0 points.
• Volatility Index(VIX) futures 21.55 -.34%.
• FTSE 100 futures +.57%.

• S&P 500 futures +.17%.

• NASDAQ 100 futures +.39%.

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (AXL)/.26
• (CCJ)/-.08
• (CI)/4.40
• (DKNG)/-.46
• (ELAN)/.23
• (FLR)/.03
• (ITT)/.87
• (LEA)/2.95
• (NKLA)/-.34
• (UI)/2.31
  

After the Close:

• None of note
  

Economic Releases

8:30 am EST

• Two-Month Payroll Net Revision.
• The Change in Non-Farm Payrolls for April is estimated at 1000K versus 916K in March.
• The Unemployment Rate for April is estimated to fall to 5.8% versus 6.0% in March.
• Average Hourly Earnings MoM for April is estimated unch. versus a -.1% decline in March.
  

10:00 am EST

• Wholesale Trade Sales MoM for March is estimated to rise +1.0% versus a -.8% decline in Feb.

3:00 pm EST

• Consumer Credit for March is estimated at $20.0B versus $27.578B in Feb.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Eurozone Trade Data, 1Q Mortgage Delinquencies/Foreclosures reports and (CL) annual meeting could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly higher, boosted by industrial and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Reversing Slightly Higher into Afternoon on Stable Long-Term Rates, More Dovish Fed Commentary, Earnings Optimism, Telecom/Metals & Mining Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Mixed
  

• Volume: Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 19.5 +1.6%
• Bloomberg Global Risk On/Risk Off Index 3,134.0 +2.0 points

• Euro/Yen Carry Return Index 135.86 +.27%

• Emerging Markets Currency Volatility(VXY) 9.5 -1.4%

• S&P 500 Implied Correlation 53.2 +.5%

• ISE Sentiment Index 94.0 -5.0 points
  

• Total Put/Call .87 +2.4%

• NYSE Arms .86 +6.2%

Credit Investor Angst:

• North American Investment Grade CDS Index 51.54 +1.06%
  

• US Energy High-Yield OAS 433.02 -.13%

• European Financial Sector CDS Index 59.98 +1.21%

• Italian/German 10Y Yld Spread 115.0 +4.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 79.74 +.87%
  

• Emerging Market CDS Index 165.57 -1.26%
  

• China Corp. High-Yield Bond USD ETF(KCCB) 39.42 +.28%

• 2-Year Swap Spread 10.75 -.75 basis point

• TED Spread 16.75 unch.
  

• 3-Month EUR/USD Cross-Currency Basis Swap -1.5 +1.0 basis point
  
• MBS  5/10 Treasury Spread  63.25 +.25 basis point
  
• IHS Markit CMBX BBB- 6 71.5 -.25 basis point
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 61.05 +.57%
• 3-Month T-Bill Yield .01% unch.
  

• Yield Curve 143.0 -5.0 basis points
  

• China Iron Ore Spot 191.10 USD/Metric Tonne +8.9%

• Citi US Economic Surprise Index 22.3 +.1 point

• Citi Eurozone Economic Surprise Index 164.3 +5.2 points
  

• Citi Emerging Markets Economic Surprise Index 51.7 -.2 point

• 10-Year TIPS Spread 2.46 unch.
• 89.0% chance of no change at Sept. 22nd meeting, 89.0% chance of no change at Nov. 3rd meeting

Overseas Futures:

• Nikkei 225 Futures: Indicating -46 open in Japan 
• China A50 Futures: Indicating -56 open in China

• DAX Futures: Indicating +13 open in Germany

Portfolio:

• Slightly Lower: On losses in my tech/biotech/medical sector longs
  

• Disclosed Trades:  None
  

• Market Exposure: 75% Net Long